Our Mortgage Rate Competition indexes for both refinance and purchase jumped higher, mirroring the move to a seven-year high in mortgage interest rates. The increase in rates is a little surprising in that it lacked the traditional catalysts for such a significant move. The most recent inflation and wage data were moderate, and these measures have a close relationship with and influence upon nominal interest rates.
The non-inflation part of rates reflects supply and demand for government borrowing. Longer term, the government deficit will place substantial upward pressure on U.S. rates. The mitigating factor in recent years has been the even lower rates in other major global interest markets, the EU and Japan, anchoring U.S. rates. If foreign demand for U.S. debt declines, rates will move higher as supply rises with government borrowing. Another source of weakening demand is U.S. corporations selling Treasuries in the wake of recent tax reforms. Changes to the treatment of foreign earnings have led companies to reduce their cash balances, which were most commonly held in Treasuries. This selling is pushing rates up.
Released each month, The LendingTree Mortgage Offers Report contains data from actual loan terms offered to borrowers on LendingTree.com by lenders. Stay up to date with the most recent LendingTree Mortgage Offers Reports below: